Linde Plc · NASDAQ:LIN
Linde — Non-Deal Roadshow (February 2010)
55 slides from Linde's roadshow presentation, Feb 10, 2010
Slide 1: Staying on Track. Vienna Roadshow.
Staying on Track. Vienna Roadshow. 10 February 2010 Thomas Eisenlohr, Head of Investor Relations
Slide 2: Disclaimer
Disclaimer This presentation contains forward-looking statements about Linde AG (“Linde”) and their respective subsidiaries and businesses. These include, without limitation, those concerning the strategy of an integrated group, future growth potential of markets and products, profitability in speci
Slide 3: Agenda
Agenda Operational performance — Financial KPIs — Resilience in crisis — HPO (High Performance Organisation) Set-up for sustainable profitable growth — Emerging market footprint — Business synergies Gases and Engineering — Energy and Environmental mega-trend — Healthcare mega-trend Outlook — Outlook
Slide 4: Group, 9M operational performance
Group, 9M operational performance Group operating profit excl. restructuring charges down 4.7% in € million, Sales Operating Profit* as reported 9M 2008 9M 2009 9M 2008 9M 2009 9,392 1,910 -8.8% 1,741 -11.5% 8,313 7,157 -7.4% 6,629 Gases 1,819 -3.1% 1,763 -6.4% comp. 2,063 -18.7% 1,677 Engineering -
Slide 5: Group, cash flow statement
Group, cash flow statement Another strong cash flow contribution in Q3 in € million 9M 08 9M 09 Operating Profit 1,910 1,741 Change in Working Capital -241 25 Other changes -368 -342 Operating Cash Flow 1,301 1,424 Net investment in tangibles/ intangibles -773 -653 Acquisitions/Financial investments
Slide 6: Group, financial position
Group, financial position Well spread maturity profile with strong liquidity reserve Net debt, in € bn Cash position & credit facility cover all financial maturities Net debt/EBITDA of 2.5x in FY 2008 within target range of 2-3x until end of 2010 € 2 bn credit facility available until March 2011: 2,
Slide 7: Gases Division, quarterly focus
Gases Division, quarterly focus Positive sequential trend maintained and confirmed in Q3 in € million 2009: Sequential development Ongoing sequential growth +3.9% +5.6% +40 bp +1.7% +8.4% +170 bp — Further sales increase on Q2 09 2,157 2,193 2,279 592 625 27.0% 27.4% 546 — Emerging Markets keep show
Slide 8: Gases Division, quarterly focus
Gases Division, quarterly focus Sequential improvement mainly driven by emerging markets Western Europe Americas Asia & Eastern Europe South Pacific & Africa -2.2% +4.2% -1.8% – +4.9% +3.8% +15.5% +8.1% 935 952 501 449 466 386 914 492 492 428 357 309 Q1/09 Q2/09 Q3/09 Q1/09 Q2/09 Q3/09 Q1/09 Q2/09 Q
Slide 9: Gases Division, product areas
Gases Division, product areas Various distribution mix served from one product source Tonnage Healthcare Global #2 Global #2 — 15-year take-or-pay contracts — Hospital care & Homecare (incl. base facility fees) — Bulk & cylinder gases — Add. growth in JVs & Embedded — Structural growth Finance Lease
Slide 10: Gases Division, local business model
Gases Division, local business model 70% of revenues come from a leading market position In bulk & cylinder: >70% of revenues from >30% market share positions Sales split by market shares Market leader in 46 of the 70 major countries, #2 Player in another 10 €9.5 bn* <30% ≥ 30% ≥ 40% 70% ≥ 60% Marke
Slide 11: Gases Division, customer industries
Gases Division, customer industries Stability driven by a broad customer base 2008: Split of product areas by major end-customer groups Other Retail Electronics Chemistry & Energy Manufacturing Tonnage Metallurgy & Glass Bulk Metallurgy & Glass Chemistry & Energy Electronics Food & Beverages Other H
Slide 12: Gases Division, sales by product areas
Gases Division, sales by product areas (consolidated) Positive sequential momentum confirmed in Q3 2009 in € million 7,080* -6.4% +3.9% 2,279 2,193 6,629 726 +5.6% +0.8% 259 Healthcare 257 767 1,579 -4.2% 524 Tonnage 490 +6.9% 1,513 1,791 -8.7% +4.5% 562 Bulk 538 1,636 2,984 -9.1% 2,713 908 +2.9% 93
Slide 13: High Performance Organisation (HPO)
High Performance Organisation (HPO) Implementing the next step of our continuous optimisation BOC Acquisition Integration Synergies HPO Transformation The Linde Group Direct merger savings Continuous improvement — Pure play — New operating model — G&A — Process excellence — Portfolio — One culture —
Slide 14: Agenda
Agenda Operational performance — Financial KPIs — Resilience in crisis — HPO (High Performance Organisation) Set-up for sustainable profitable growth — Emerging market footprint — Business synergies Gases and Engineering — Energy and Environmental mega-trend — Healthcare mega-trend Outlook — Outlook
Slide 15: Growth opportunities
Growth opportunities Product portfolio serving mega-trends Emerging Markets Energy/Environment Healthcare Leveraging Gases & Engineering business synergies ▸ Operational performance | ▸ Set-up for sustainable profitable growth | ▸ Outlook | ▸ Appendix 15
Slide 16: Gases Division, project pipeline
Gases Division, project pipeline Prospects for projects improving again — 65 start-ups in our project pipeline by 2011 (incl. JVs) — Still lower activity in new contract signings — However, customer discussions on potential projects show renewing interest, especially in Emerging Markets — New tonnag
Slide 17: Engineering Division
Engineering Division Global set-up with leading market position in all segments Air Separation Plants Hydrogen/ Olefin Plants Natural Gas Synthesis Gas Plants Top1 Top2 Top2 Top3 Providing plants for the gases business Providing chemistry and energy related solutions and 3rd party customers to 3rd p
Slide 18: Gases and Engineering business model: Russia
Gases and Engineering business model Well established footprint in Russia Strong long-term potential in Russia: Gases and Engineering footprint in Russia: Serving the industrial expansion with our combined Gases and Engineering offering St. Petersburg Engineering Division Vorsino Moscow Long-standin
Slide 19: Gases and Engineering business model: common customers
Gases and Engineering business model Leverage synergies from common customer relationships ADNOC (Abu Dhabi National Oil Corporation) Engineering - customer relationship in Gases and Engineering: – strong footprint on the Arabian Peninsula: ADNOC - long-term customer of our Engineering Division Ethy
Slide 20: Gases Division, local business model
Gases Division, local business model Strong set-up in emerging markets Market leader in 4 out of 5 emerging market regions Eastern Europe & Middle East #1 Greater #1 China South and #1 East Asia South America #2 #1 South Africa ▸ Operational performance | ▸ Set-up for sustainable profitable growth |
Slide 21: Industrial gases market, consumption by region
Industrial gases market, consumption by region Wide diversity between mature and developing markets USA: $49 Western Europe: $38 Eastern Europe: $16 China: $2 South and East Asia: $3 South America: $13 Gases market per capita South Africa: $13 Australia: $42 Overproportionate growth in emerging mark
Slide 22: Energy/Environmental Mega-Trend
Long term growth drivers remain intact Energy/Environmental Mega-Trend Our Gases & Engineering solutions address structural challenges: Limited resources / environmental protection Higher returns on existing fields Enhanced Oil & Gas recovery Nitrogen/CO2 Sourer crude / lower emissions Refinery fuel
Slide 23: Gases & Engineering technology portfolio
Energy/Environmental Mega-Trend Gases & Engineering technology portfolio Energy Transport/ Efficiency in Energy value chain Upstream conversion Storage/Climate energy use Fossil Floating Natural Gas LNG ship LNG GTL LPG Numerous (gaseous) LNG processing systems industrial gas applications Fossil Fra
Slide 24: Healthcare Mega-Trend
Long term growth drivers remain intact Healthcare Mega-Trend Global healthcare systems face structural trends: — MORE patients Increasing consumption of Hospital Care (ageing population) traditional healthcare gases — HIGHER expectations New diagnostics f.ex. COPD*, (quality of life) & therapies Sle
Slide 25: Agenda
Agenda Operational performance — Financial KPIs — Resilience in crisis — HPO (High Performance Organisation) Set-up for sustainable profitable growth — Emerging market footprint — Business synergies Gases and Engineering — Energy and Environmental mega-trend — Healthcare mega-trend Outlook — Outlook
Slide 26: Outlook 2009 unchanged
Outlook 2009 unchanged Economic background: — Moderate recovery expected in H2, based on the stabilisation since the end of H1 — 2009 global economic output to be significantly below 2008 Group — Further recovery in the second half-year compared to the first half as the economic improvement takes ho
Slide 27: Economic climate improves in all geographies
Economic climate improves in all geographies Asia crosses its long-term average ▸ Operational performance | ▸ Set-up for sustainable profitable growth | ▸ Outlook | ▸ Appendix 27
Slide 28: Summary
Summary Resilience in the crisis Profitability strengthened in difficult market environment, ongoing strong cash flow generation Improving sequential trend confirmed in the third quarter, supported by cost initiatives Bulk and cylinder business supported by strong market positions Competitive set-up
Slide 29: Appendix
Appendix a THE LINDE GROUP
Slide 30: Group Financial Highlights
Group Financial Highlights in € million 9M 08 9M 09 ∆ in % Sales 9,392 8,313 -11.5 Operating profit 1,910 1,741 -8.8 Margin 20,3 20,9 +60 bp Operating profit excluding restructuring charges 1,910 1,821 -4.7 Margin 20,3 21,9 +160 bp EBIT before special items and PPA depreciation 1,288 1,079 -16.2 Spe
Slide 31: Group Financial Highlights
Group Financial Highlights in € million 9M 08 9M 09 ∆ in % Net income - Part of shareholders Linde AG 552 417 -24.5 + depreciation/amortisation from purchase price allocation +277 221 + special items -59 - - respective tax impact -77 -69 Adjusted Net Income 693 569 -17.9 + Restructuring costs - +80
Slide 32: Gases Division, 9M sales bridge
Gases Division, 9M sales bridge Sales -6.4% on comparable basis in € million +3.5% -1.4% -3.1% 7,157 -6.4% 6,629 Sequentially: Q1 Q2 Q3 -4.4% -5.8% -8.8% 9M 2008 Consolidation Currency Natural Gas Price/Volume 9M 2009 ▸ Operational performance | ▸ Set-up for sustainable profitable growth | ▸ Outlook
Slide 33: Gases Division, operating segments: Western Europe
Gases Division, operating segments Western Europe in € million, as reported Sales Operating Profit Operating Margin 3,131 -10.5% 854 - 8.4% 2,801 782 27.3% +60 bp 27.9% 9M 2008 9M 2009 9M 2008 9M 2009 9M 2008 9M 2009 9M highlights — Comparable sales development of -5.4%, continued currency effect fr
Slide 34: Gases Division, operating segments: Americas
Gases Division, operating segments Americas in € million, as reported Sales Operating Profit Operating Margin 1,652 320 -1.3% 316 19.4% +190 bp 21.3% -10.1% 1,485 9M 2008 9M 2009 9M 2008 9M 2009 9M 2008 9M 2009 9M highlights — Comparable sales development of -8.3% — Further stabilisation, with initi
Slide 35: Gases Division, operating segments: Asia & Eastern Europe
Gases Division, operating segments Asia & Eastern Europe in € million, as reported Sales Operating Profit Operating Margin 1,459 417 -0.5% 415 -8.0% 1,343 28.6% +230 bp 30.9% 9M 2008 9M 2009 9M 2008 9M 2009 9M 2008 9M 2009 9M highlights — Comparable sales development of -6.4% — First indications of
Slide 36: Gases Division, operating segments: South Pacific & Africa
Gases Division, operating segments South Pacific & Africa in € million, as reported Sales Operating Profit Operating Margin +8.6% 1,052 +9.6% 250 23.5% +30 bp 23.8% 969 228 9M 2008 9M 2009 9M 2008 9M 2009 9M 2008 9M 2009 9M highlights — Comparable sales development of -6.1% — Elgas consolidation mor
Slide 37: Gases Division, Joint Ventures
Gases Division, Joint Ventures Consolidation effect, but strong operational performance in € million Proportionate Sales Share of Net Income (not incl. in the Group top-line) (contribution to operating profit) Reduction due to full consolidation of 10 Driven by new plant start-ups, former JV Elgas a
Slide 38: Gases Division, customer industries
Gases Division, customer industries Stability driven by a broad customer base 2008: Split by end-customer groups Others 7% Chemistry & Retail Energy 11% 22% Electronics 5% Metallurgy & Manufacturing Glass 21% 16% Healthcare Food & 11% Beverages 8% ▸ Operational performance | ▸ Set-up for sustainable
Slide 39: Engineering Division: Order backlog of € 3.9 billion
Engineering Division Order backlog of € 3.9 billion Others — Order backlog of € 3.911 bn (year-end 2008: € 4.436 bn) 8% HyCo — Margin of 8.6% above target level of 8% 10% — Increased activity level of project development especially Nat. Gas Order 8% intake in Emerging Markets 9M 09 ASU 10% Nat. Gas
Slide 40: Engineering Division, financial track record
Engineering Division, financial track record Leading market position in all segments Air Separation Plants Hydrogen and Synthesis Gas Plants Order intake, € bn 9M 09 order intake by segment Top 1 Top 2 Products: Products: — Oxygen — H2/CO/Syngas 2.295 Others — Nitrogen — Rare gases — Ammonia — Gas r
Slide 41: Engineering Division, footprint in China
Engineering Division, footprint in China Strong established customer base Heilongjiang Jilin Xinjiang Liaoning Beijing Dalian Ningxia Tianjin Shanxi Shandong Jiangsu Gansu Shaanxi Henan Anhui Shanghai Taipei Hubei Taichung Sichuan Zhejiang Jiangxi Hunan Fujian Mai Liao Air separation units Guizhou T
Slide 42: Group, FY 2008 Key P&L items
Group, FY 2008 Key P&L items in € million 2007 2008 in % Sales 12,306 12,663 +2.9 Operating profit 2,424 2,555 +5.4 Margin 19.7% 20.2% +50bp EBIT before special items and PPA depreciation 1,591 1,703 +7.0 Special items 607 59 - PPA depreciation -446 -371 - EBIT 1,752 1,391 - Financial Result -377 -3
Slide 43: Group, FY 2008 Financial key indicators
Group, FY 2008 Financial key indicators Further improvement in all our three key financial indicators Profitable growth for our shareholders: adjusted EPS increase of 8.8% Further improvement in capital returns: ROCE improvement of 210 bp Strong cash flow generation maintained in weakening environme
Slide 44: Group, FY 2008 Adjusted ROCE
Group, FY 2008 Adjusted ROCE in € million Capital Employed Adj. ROCE Adj. ROCE (B/S date) 10.3% 12.4% 15,490 13,884 13,508 7,878 13,696 7,116 Adj. Equity 7,445 7,330 1,703 + Financial debt 1,591 Adj. EBIT + Net pension obligation 403 681 Avg. CE - Net financial services -824 -712 - Cash -903 -1,022
Slide 45: Group, FY 2008 Cash flow statement
Group, FY 2008 Cash flow statement in € million Q1/08 Q2/08 Q3/08 Q4/08 2008 2007 Operating Profit 602 656 652 645 2,555 2,424 Change in Working Capital -199 17 -59 44 -197 -114 Funds from operations 403 673 593 689 2,358 2,310 Paid taxes -38 -77 -86 -28 -229 -336 Other changes -28 -117 -22 -86 -253
Slide 46: Group, FY 2008 Free cash flow after investments
Group, FY 2008 Free cash flow after investments Operating Cash flow in € million -225 337 Free Cash flow Q1 112 Cash Flow from investing activities -199 Q2 479 280 -292 Q3 485 193 -556 Q4 575 19 -1,272 1,876 Total 604 — Strong development of operating CF in Q4 — High investment activties in Q4 for b
Slide 47: Group, FY 2008 Capital expenditure and acquisitions
Group, FY 2008 Capital expenditure and acquisitions Cash Flow from investing activities CAPEX Acquisitions 42.0% in € million -1,272 2,086 -1,683 -1,611 1,470 1,451 1,035 CAPEX/ 576 Acquisitions 1,062 +36.6% Gases 213 Other* -21 -31 Engineering 46 +15.2% 53 -73 -34 Other Proceeds 3,781 442 2007 2008
Slide 48: Gases Division, FY 2008 Capital expenditure
Gases Division, FY 2008 Capital expenditure in € million +36.6% 1,451 506 1,062 +34.2% Western Europe 377 295 +38.5% Americas 213 505 Asia & Eastern Europe 334 +51.2% 145 213 South Pacific & Africa 138 +5.1% 2007 2008 ▸ Operational performance | ▸ Set-up for sustainable profitable growth | ▸ Outlook
Slide 49: Group Tax rate
Group Tax rate 39.7% 27.6% 2009 target Range: 25–27% 22.9% 2006 2007 2008 — Post-acquisition restructuring fully effective in 2008 — Positive impact of tax rate changes — Strong performance of the Group in countries with lower tax rates ▸ Operational performance | ▸ Set-up for sustainable profitable
Slide 50: Group Dividend
Group Dividend Consistent dividend policy: dividend development in line with growth of operating profit +5.9% €1.80 +13.3% €1.70 €1.50 2006 2007 2008 ▸ Operational performance | ▸ Set-up for sustainable profitable growth | ▸ Outlook | ▸ Appendix 50
Slide 51: Group, FY 2008 Pensions
Group, FY 2008 Pensions Net obligation increases due to Further actuarial losses of approx. € 400 m actuarial gains/losses avoided due to early optimization of the plan assets portfolio structure DBO Plan Net in € million 45% 28% Shares asset obligation 01.01.2008 5,152 4,813 339 Service costs 106 1
Slide 52: Group, Purchase Price Allocation
Group, Purchase Price Allocation Expected depreciation & amortisation Development of depreciation and amortisation (in € million) Impact in 2008: € 371 million Expected range 500 2009 > 275 – 325 2010 > 200 – 250 400 2011 > 175 – 225 300 … 200 2022 < 100 100 0 11 15 21 07 09 20 20 20 20 20 ▸ Operati
Slide 53: Accounting considerations: Impact of PPA and EFL
Accounting considerations Impact of PPA and EFL Purchase Price Allocation (PPA) IFRIC 4: Embedded Finance Lease (EFL) Impact in 9M 2009: € 221 m (9M 08: € 277 m) Impact* in 9M 2009: € -94 m (9M 08: € -95 m) Expected impact FY 2009: €275-325 m Expected impact* FY 2009: €-118 m *(on Sales and EBITDA)
Slide 54: Group Definition of financial key indicators
Group Definition of financial key indicators Operating Return EBITDA (incl. IFRIC 4 adjustment) excl. finance costs for pensions Profit excl. special items incl. share of net income from associates and joint ventures adjusted Return Operating profit - depreciation / amortisation ROCE excl. depreciat
Slide 55: Investor Relations Contacts
Investor Relations Contacts Thomas Eisenlohr, Head of Investor Relations Phone +49.89.35757-1330 thomas.eisenlohr@linde.com Robert Schneider Phone +49.89.35757-1332 robert.schneider@linde.com 55